Question

Economic exposure refers to Multiple Choice the sensitivity of realized domestic currency values of the firm's contractual cash flows denominated in foreign currencies to unexpected exchange rate changes. the extent to which the value of the firm would be affected by unanticipated changes in exchange rate. the potential that the firm's consolidated financial statement can be affected by changes in exchange rates. ex post and ex ante currency exposures.

Answer 1

The extent to which the value of the firm would be affected by unanticipated changes.

Step-by-step explanation:

Economic exposure can be defined as the effect in which a change in the exchange rate have on different organisations. Economic exposure is of great importance to businesses that carry out various foreign transactions because it affects their operations either positively or negatively, therefore it is very essential for organisations to properly manage economic exposure.

A high foreign exchange can lead to an increase in production, this can lead to a reduction in the amount of profit earned by the company.